JPMorgan head gears up for grilling

Tuesday, June 12, 2012 - 02:31

June 12 - JPMorgan Chase chief Jamie Dimon will be in the hot seat in DC, with Senators expected to press for details on how much a trading loss has grown at the bank- and what he knew about the risks that led to at least a $2 billion trading loss. Bobbi Rebell reports.

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JPMorgan Chase head Jamie Dimon will have some explaining to do when he faces the Senate Banking Committee Wednesday -and not just his own company's $2 billion and growing trading loss. He's also going to have to defend the banking business from new and increased regulation that they do not want.
Karen Petrou, Managing Partner at Federal Financial Analytics:
SOUNDBITE: KAREN PETROU, MANAGING PARTNER, FEDERAL FINANCIAL ANALYTICS (ENGLISH) SAYING:
"He wants to say this was an isolated risk management failure at the bank that was dealt with promptly and properly when it was found, and that it does not threaten the safety and soundness of JPMorgan Chase nor that of the financial system. And then he will try to persuade the Senators that because of those facts they should not overcompensate which would be his approach, with undue regulation that would have unanticipated broader market impact. "
REPORTER BRIDGE: BOBBI REBELL, REUTERS REPORTER (ENGLISH) SAYING:
Look for Dimon to get pressed for more details on what really happened with that now notorious trade. He's avoided details in the past, saying he doesn't want to reveal trading strategies that could help the competition take advantage of the firm's still open positions. Dimon is also probably going to face a lot of questions about whether the transaction violated the Volcker rule, which limits proprietary trading by the banks.
SOUNDBITE: KAREN PETROU, MANAGING PARTNER, FEDERAL FINANCIAL ANALYTICS (ENGLISH) SAYING:
'I would expect Mr. Dimon to say as he has before that it was a hedging transaction that went wrong and therefore not covered by the Volcker rule. Senators will try to push him on was it really hedging, how do you know, the various initia of whether something is or isn't hedging."
And make no mistake- many of the Senators will use this to further their political agenda:
Reuters reporter Sarah Lynch:
SOUNDBITE: SARAH LYNCH, REUTERS REPORTER (ENGLISH) SAYING:
"Those who are in favor of the Volcker rule and are in favor of the regulations that Dodd-Frank has required will point the trading loss and say this is the reason we put these rules in place. That these big banks are taking risks; they are suffering losses; that proprietary trading needs to be reigned in at these big banks."
Dimon has to convince them he is in firm control of the company- despite evidence that hasn't always been the case.
Bobbi Rebell, Reuters.

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